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MONTHLY BUSINESS o f the Volume 27, No. 12 ~EVIE W. FEDERAL RESERVE BANK o f Dallas This copy is "eleused for pub· lica tion in afternoon pallers- Dallas, Texas, February I, 1943 DISTRICT SUMMARY Developments in business and industry in the Eleventh Federal Reserve District during 1942 and the early part of 1943 reflected generally efforts to meet the requirements of the war program. Department store sales rose to new high levels during 1942, whil e inventories, which had been rising for about two years, have been falling off steadily since July. Throughout the year weather conditions on the whole were fa vorable to successful agricultural operations, and production of most major crops in Texas exceeded that in the preceding year by substantial margins. As the result of higher prices for a larger volume of production, cash farm income in the district was almost a third larger than in 1941. The war production program stimulated industrial development in the district and there was a furt?er expansion in industrial facilities. The volume of constructIOn contracts awarded during 1942 was the largest of reco.rd. Production of crude petroleum in the district was curtailed during the year but stocks rose by almost one-fourth, reflecting difficulties in transporting petroleum and petroleum products to the Eastern Seaboard. During December consumer buying in virtually all lines of trade was in heavy volume. Department store sales increased sharply from November to December and were 22 per cent larger than in December, 1941. Industrial operations continued at a high level. Weather conditions were generally favorable to the development of crops and livestock during December and early January, but the severe cold wave which swept over the district during the third week of January caused an undetermined amount of damage to grain and truck crops and some losses of livestock. BUSINESS Several f eatures distinguished consumer bu~ing at ~epar: ment stores in this district during 1942. Reflectmg steadily rISing money incomes, especially among groups who normally spend a large proportion of current earnings, a~gregate sales rose to record levels. Sales of durable goods, which were u?usually heavy during 1941, were in much smaller ,:olume In 1942, whereas sales of a wide range of soft goods estabhshed new peaks. In general, this shift reflected growing shortages o~ durable goods rather than changes in consumer preferences. Fmally, there was a marked change in the method of payment for goods. Cash sales constituted a larger proportion of total sal~s than formerly, while further restrictions on instalment credit contributed to a substantial reduction in accounts receivable. I?~ring the early part of the year buying was stimulat~d by an.tlclpated shortages in many lines of goods, by fear~ of higher pnces and the extension of restrictions on consumer mstalment credi t. This type of buying subsided during the second quarter when both the general maximum price control order and t?e amendments to Regulation W, applicable to instalment cred~t, became effective. During the latter half of the year sales agam advanced and at the end of the year were at the highest level of r~cord. Although there were wide month- to-montl~ fluctuatIOns, sales of mechanical refrigerators, stoves, mechanIcal washers, furniture and other types of household appliances we~e well below those in 1941, whereas marked increases occurred m sales of virtually all types of piece goods, ready-to-wear appa:el, wo~en's and misses' ready-to-wear, men's and boys' c10thmg and In most basement store departments. During 1941 and the first quarter of 1942 cash sales ac- Feb. 2 counted for about one-third of total sales at department stores but during the remainder of 1942 averaged almost one-half of total sales. The growing importance of cash sales is further emphasized by the fact that the increase of 14 per cent in total sales during 1942 was accounted for entirely by the much larger volume of cash sales. Partly because of the amendments to Regulation Wand partly because of larger incomes, consumers tended to place their credit accounts on a current basis during 194 2. Collections on regular accounts outstanding at the first of the month increased from an average of about 40 per cent during 1941 to more than 60 per cent during the last quarter of 1942. Collections on instalment accounts, which during recent years had averaged slightly less than 15 per cent, rose to 27 per cent by the end of 1942. Consequently, the volume of accounts outstanding declined substantially during the year. Inventories at reporting department stores in the district fol lowed an upward trend from the fall of 1940 through the first half of 1942, and this bank's seasonally adjusted index of department store stocks rose to 114 per cent of the 1923-1925 average in July, 1942. The increase in inventories was brought about partly by the general increase in business activity, and further accumulations were apparently due to fears of shortages, higher prices and slower deliveries. The general price control order, which became effective during May, removed one incentive for inventory accumulation but the problem of shortages and slower deliveries continued. During the last six months of the year, particularly the last quarter, unusually large sales of irreplaceable goods had the effect of greatly reducing inventories. The decline was more than is usual at this time of the year with the result that this 'bank's adjusted index of department store stocks dropped to 87 per cent of the 1923-1925 average at the end of December. It is probable that some further decreases in inventories will occur during 1943, in view of the continued heavy demand for merchandise and the recently announced War Production Board order controlling wholesale and retail inventories. At the end of 1942, outstanding orders, a less reliable indicator than formerly, were more than twice as large as those a year earlier. According to data reported by the Department of Commerce, sales at most types of independent retail stores in Texas during 1942 were generally higher than those in 1941. At reporting food stores, a higher level of sales became evident in the first quarter and throughout the year averaged 25 per cent above those in 1941. A similar increase OCCUlTed in sales at apparel REPORTING MEMBER BANKS IN LEADING CITIES _ ~_-l---+--+--+--t---:1---t---j'400 "00 l-_-l---I---+--+ - - t-- --j'----+-- -I.200 This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) 2 MONTHLY BUSINESS REVIEW stores, with pronounced gains in sales of family clothing stores and shoe stores. Although jewelry store sales fell off somewhat during the second quarter of the year, they recovered later and averaged about 30 per cent above those in 1941. In the lumber, building and hardware groups, sales during the first half of 1942 were substantially greater than in the corresponding period of 1941, 'but during the latter part of the year sales began to fall off, reflecting mainly shortages in supplies of hardware and farm implements. The principal factor responsihle for a smaller average net gain at all types of stores during 1942 was the virtual cessation of business in the automobile and allied groups. In general, the trend~ in sales of independent stores in Texas apply also to those in Oklahoma, Arizona and New Mexico, although the gains were somewhat smaller. . PRICE TRENDS The effectiveness of the Office of Price Administration's program to stabilize living costs in this district is illustrated by a review of the trend of living costs of wage earners. The weighted cost of living index of the National Industrial Conference Board, which covers six categories of goods and services consumed by wage earners and lower salaried workers, increased 8.8 per cent in Houston and 10.4 per cent in Dallas from July, 1941 to March, 1942. From March to November, 1942, the index rose 2.9 per cent in Houston and 3.4 per cent in Dallas. Between November, 1941 and November, 1942, the cost of living index rose 6.4 per cent in Houston and 7.0 per cent in Dallas. Substantial increases in the costs of food, clothing and housefurnishings were experienced in both cities between November, 1941 and November, 1942, but during the twelve months the increase in the cost of housing was moderate, and the cost of fuel and light remained constant in Houston and declined in Dallas. Between November, 1941 and November, 1942, the index of wholesale prices in the United States rose 8.4 per cent, reflecting substantial increases ip the prices of farm products, foods, and raw materials. More moderate increases occurred during the period in the wholesale price indexes of manufactured and semimanufactured products. The upward trend of wholesale prices was considerably less pronounced during the months after the General Maximum Price Regulation was applied. In the eightmonth period ended March, 1942, the wholesale commodity price index increased 9.9 per cent, while in the eight-month period from March to November, 1942, the index increased only 2.8 per cent. Substantial increases in both periods were experienced in foods, which increased 13.5 per cent in the former period and 7.7 per cent in the latter, and in raw materials, which increased 14.1 per cent and 5.8 per cent, respectively. BUSINESS BIRTHS AND DEATHS According to the data compiled by Dun and Bradstreet, Incorporated, the number of mercantile establishments in the Eleventh District decreased by approximately 5,700 between January and October, 1942. At the end of October there were 112,404 mercantile establishments operating in this district, as compared with 118,133 on December 31,1941, and 117,990 on October 31, 1941. During the ten-month period ended October, 1942, there were 11,332 business births and 17,061 business deaths in this district. Business deaths during the period were no greater than in comparable periods of preceding years, but business births were substantially fewer. The majority of the business deaths were liquidations involving no loss to creditors; bankruptcies were exceedingly few and on the average imposed smaller losses upon creditors than in recent years. The national experience with business births and deaths during the first ten months of 1942 was similar to the experience in this district. Business deaths in the nation exceeded business births by 69,165, but business deaths were not appreciahly greater than in comparable periods of recent years. AGRICULTURE Weather conditions in the Eleventh District were favorable to successful agricultural operations throughout most of 1942. Soil preparation and early seeding operations progressed rapidly during the first t wo months of the year, and although inadequate precipitation retarded crop growth and field work in March, heavy rains during April relieved the moisture deficiency and stimulated seed germination. Continuous and widespread rains in May delayed field work to some extent and floods caused substantial crop damage in some areas, but conditions were excellent for the successful maturing of wheat, the progress of cotton planting in northwest Texas and New Mexico, and cultivation of cotton in the southern portion of the district. Favorable weather conditions which prevailed in most sections of the district during the summer improved crops, and the intermittent rains which delayed harvesting operations during the fall caused little damage to most crops. Insect infestation, which developed ea rly in the spring and continued to some extent throughout the summer, accounted for a reduction in the yield of oats and some other small grains, but did not reduce the production of row crops appreciably. Livestock ranges, which deteriorated sharply during the first quarter of 1942, showed a marked recovery following the heavy precipitation in the spring, and livestock in most areas mended rapidly and remained in good . condition through the late summer and autumn due to excellent pasturage and ample supplementary feed supplies. Production of most major crops in Texas in 1942 exceeded production in the preceding year by substantial margins. The area in cotton cultiva tion in Texas on July 1 was estimated at 8,525,000 acres, or 5 per cent greater than a year earlier, and cotton acreage in cultivation was also greater in Louisiana, Oklahoma, N ew Mexico and Arizona. On August 1 the condition of the cotton crop in this district was somewhat better than on the same date in 1941. Further improvement occurred during August and the September 1 estimate of the Texas crop was increased to 3,484,000 bales. However, tropical storms late in A ugust which damaged the crop in south Texas and leaf worm infestation in many sections of the State, together with weather damage and delay in harvesting during October and November, reduced prospective production. In consequence, the December 1 estimate of the Texas cotton crop was set at 3,113,000 bales, with an indicated per acre yield of 187 pounds from 8,015,000 WHOLESALE AND RETAIL TRADE STATISTICS ~-----'Pcrcentngc ehange in:- - - Number - - -- - Net sales Stoekstof December. 1942 from Jan. I to Dccember. 1042 frelll reporting Dcc.. Nov.. Doe. 31. 1942 Dec.. Nov .• Retail trade: firlllll 1941 1042 from 1941 1941 1042 Department stores: Total 11 th Dist . . . . 45 +23 + 52 +17 _ 7 - 24 Dallas . . ... ... . .. . 7 +23 +50 + 8 _ 0 -24 Fort Worth .... . .. . 1 +24 +62 +15 + t - 18 Houston ........ . .. 7 +17 +18 +13 - 15 -24 San Antonio .....•. +35 +47 !23 _ 4 -3 4 4 Shreveport . . ... . . . 3 - 1 +42 0 . Other oi ties . . ..... . 20 +22 +42 17 :":'i2 :":'20 Retail furniture: Total 11 th Dist ... . -10 66 + 10 +35 - 4 -13 Dallns ........... . 6 +28 + 20 +2 _0 Fort Worth ... . ... . 3 + 35 +52 - 4 Houston ...... . ... . 3 -14 + 12 +62 t -12 San Antonio ...... . 3 + 15 +38 +1 Indel'<lndent stores:· + Arizona. " .. . ... . . New Mexieo...... . Oklahoma. . . . . . . . . Texas.. . . .. .. . . .. . Wholesale trade: · Automotivu supplies Drugs. (ine!. liquors). Eloetrlcal goods ... . Groeeries .. . . ..... . Hardware . .. . .... . Surgieal eqp·t . . . . . Tobacco &: products. 392 898 .. .. .... .... .... .... ·Compiled by United States Bureau of Census. tChauge less than one-half of one pcr cenl. tStoeks at end of month. INDEXES OF DEPARTMEN'r STORE SALES AND STOCKS (1923. 1025 average= 100) December December November 1042 1041 1042 Sales (daily average) : Without scasonal adjustment ....... . 222 191 With scasonal adjustment .......... . 128 171 Stocks (ond of month): Without seasonal adjustment .......• 100 77 With scnsonal adjustment .. .... .. . .• 80 88 Ootober 1942 170 160 104 OS MONTHLY BUSINESS REVIEW 3 acres. Production and per acre yield, although substantially below the estimates issued earlier in the season were still considerably greater than in 1941, when 2,652,000 bales, or 165 pounds per acre, were harvested from 7,717,000 acres. The cotton crop, as usual, had the highest value of any single crop produced in the State, the value of lint cotton being $27 5,500,000 as compared with $2 15,072,000 in 1941, and the value of cottonseed being $61,116,000 as compared with $55,838,000 in double that in the same period of 1940. ~arm production goals for 1943 recently released by the Ulllted States Department of Agriculture War Board, indicate moderate to substantial reductions of the acreage of most majo Texas field crops in 1943. Proposed 1943 cotton acreage for th r State of 7,940,000 acres is about 2,000,000 acres smaller tha~ the allotment for 1942, and compares with 8,525 000 acres i cotton cultivation on July 1, 1942, and 8,015,000 acres har~ veste~ last year. The 1943 acreage goals in Texas for oats, barley, 1941. An outstanding feature of the agricultural experience during rye, nce and alfalfa seed are substantially smaller than actual 1942 was the phenomenal expansion of the Texas peanut crop, acreage planted in the resp~ctive crops in 1942. However, the the production of which totaled 510,000,000 pounds as com- 1943 acreage g~als for gram sorghums, flaxseed, soybeans and pared with 156,040,000 pounds in 1941; the value of the crop peanuts are consIderably larger than the acreage planted in 1942. amounted to $23,970,000 as compared with $6,398,000 in 1941. Goals for other crops are approximately the same as 1942 proProduction of corn in Texas, which amounted to 78,561,000 duction. In contrast, 1943 goals for production of livestock and dairy bushels, exceeded the 1941 harvest by 4,686,000 bushels and ranked as the State's second most important crop in dollar value. products in T exas are appreciably larger than 1942 production The 75 per cent expansion of wheat production in Texas, from with the exception of the goal for marketing and slaughter of 27,186,000 bushels in 1941 to 47,438,000 bushels in 1942, con-' sheep and lam.bs, which is. set at 79 per cent of 1942 production. tributed to an increase in the total value of the crop of nearly The Texas mIlk productIOn goal for 1943 is placed at 4 540 _ 97 per cent from $25,827,000 in 1941 to $50,759,000 in 1942. 000,000 pounds, as compared with 4,361,000,000 pound; pr~ Vegetables and fruits were likewise more profitable crops in duced in 1942;. poultry production is s~t at 224,892,000 pounds, 1942 than in 1941. The value of Texas field crops, fruits and as compared WIth 194,980,000 pounds m 1942; and the egg pronuts, and truck crops was estimated at $665,000,000 in 1942 duction goal of 262 ,671,000 dozen compares with 235,892,000 dozen produced in 1942. Goals for marketing and slaughter of as compared with $523,000,000 in 1941. Prices of most Texas farm products increased substantially cattle and calves in Texas in 1943 are placed at 3,513,000 aniduring 1942, with meat and dairy products experiencing uni- mals, 166,000 more than in 1942. Attainment of the goals will depend to a great extent upon formly large increases. On December 15, the price of hogs was 33 per cent greater than a year earlier, the price of beef cattle weather conditions and the availability of farm labor. Scarcity CROP PRODUCTfON and lambs was approximately 19 per cent higher and the price (Thousands of units) ~--Tcxns--~--Fivc SLatcs._ of sheep and veal calves was up 15 per cent and 16 per cent, 1930-39 1930-30 respectively. The price of butterfat was 29 per cent above that Unit 1042 1941 average 1942 1041 average Cotton .......... .. .......... Bales 3,113 2,652 3,080 4,747 3,070 5,374 of December 15, 1941, and the wholesale price of milk was up ... . .........••......... Buahels 78,561 73,875 75,964 142,792 131,103 131 014 2? per cent. Cotton and corn prices were also su'bstantially Corn Winter wheat .... . .......... · Bushels 47,438 27,180 31,300 l09,88lt 78,604t 82;066t Oatil. ........ .. ............. Bushels 11,210 37,975 37,521 39,476 67,825 60,301 hIgher, the price of cotton increasing 16 per cent during the Burley ....... . ...... . .... . .. Bushels 4,818 8,775 2,415 18,1 11 t 20,008t b,828t Rice .. ...................... Bushels 1Ii,498 11,500 10,590 41,25Ut 31,OOOt 20,11i7! year and that of corn 26 per cent. The prices of other major Broomcorn . . . . . . . . . . . . . . . . .. Tons 3,300 4,200 3,660 22,000* 20,400' 23,600* Texas farm products increased more moderately but on Decem- Grain sorRhuma . ... ........ . . Bushels 59,675 57,976 27,078 75,557 72,006 37,037 Sorghums fodorage .. ........ Tons 4,003 5,752 6,402 7.900 4,341 ber 15, 1942 were from 5 per cent to 9 per cent greater than Tame hay. . . . . . . . . . . . . . . . . .. Tons 1,441 1.380 3,108 793 4,282 4.080 2,502 Wild hay .... ...... .... .. .... T OllS 220 221 226 850 741 097 a year earlier. Peanuts .. , . ... . . ..... . ..... . Pounds 510,000 150,040 86,458 697,6401205,1651108.0701 H~gher prices for farm products and the large volume of pro- Irish pototocs ............... · Bushels 5,301 0,039 3,312 10,067 11, 205 0,042 Sweet pelot"es ....... . . ...... Bushels 3,825 MOO 4,720 1O,4a3§ 12,4201 12,7831 ?UctlOn resulted in substantially greater cash incomes to farmers Penches .. . ...... . .•........ . Bushels 1,010 2,475 1,201 2.582 3,760 2.002 Oranges .................... Hoxes 2,900 2,850 2,650 3,9400 3,7020 343 10 III t~lis district during the first 10 months of 1942 than were Grapefruit .. .............. Boxes 10,600 14,500 13.650 19,255t 17,950t lO'300t Peenns .,. .... . .. . ... . . Pounds 0,000 22, 100 24,270 21,5001 58,3001 46;3701 ~'ecelved in comparable periods of ,preceding years. Cash farm .TOXDB Oklahoma, New Mexico, Arizona, Louisiana. tTCXU8, Oklahoma, Now Moxico Income in Texas during the first 10 months of 1942 totaled Arizona. iTexos and. LouisionD:. *TOXBS, Oklahoma, Now Mexico. §Toxas, Oklahoma: $7 34,312,000 as compared with $561,694,000 during the first Louisinun. &Texns, Arizona, LoUISiana. SOURCE: United State., Deportment of Agriculture. 10 m~nths of 1941, an increase of 3 1 per cent. Cash income VALUE OF' 'rEXAS CROPS from lIvestock and livestock products accounted for 52 per cent - -Value of crop--. Per cent of totol of the total Texas cash farm income in the first 10 months of (Tlo42SilndS of dfJ~Ots) - -1-04-2-'- - 10-41- Crop 1942 as compared with 44 per cent of total cash income in the COrll. ...... .. $ 60,910 $ 53,929 10.5 10.3 25,827 7.6 5.0 first 10 months of 1941. Income from crops in Texas was 12 Whent .. .. . .. ..... . ........ .. ... ... , 50,759 24,487 16,02 1 3.7 3.2 Rioe ..... ········· · ········ · ······ . 0,328 10,1 84 1.4 3.7 per cent greater than during the comparable period of 1941 and Other grains! excluding sorghums . . .. . 67,420 60,841 10 . 1 13.3 Sorghums, a I kinds ... . ............ .. . 7I per cent above the cash income from crops realized during Pennuts, for nuts . ....... . .. .. . . ..... . 23,970 0,308 3.6 1. 2 215,072 41.4 41.1 the first 10 months of 1940 while cash income from livestock Cotton lint . . ....................... . 275,500 01,11 6 55,838 0. 2 10.7 Cottonseed . ....... . .... . ....... ... .. 40,087 8.0 7.8 and livestock products was' up 54 per cent from 1941 and Vegetables and fruita ... . .. . ... . .... . . 50,135 Other crops ........... . .......... . .. . LIVESTOCK REOEIPTB-(Number) - - -Fort Worth Deo. Nov. Dec. Dec. g~~;le . .......•...... .. .. M~c~~~':' :::::::::: ::::::: 1042 53.608 32,845 80,486 113,782 1041 55,142 38,400 58,190 34,042 1042 01,002 00,702 55,003 144,870 1042 21,527 20,010 12,080 32,753 San Antonio --~ Nov. Deo. 1041 17,602 27,334 13,300 7,520 1042 H7,488 56,003 11,733 27,71 2 COMPARATIVE TOP LIVESTOCK PRICES (Dollars per hundredweight) San AJltonio --~ - - - F o r t Worth Nov. Dec. Deo. Dec. Nov. Deo. 1042 Beef ateors slec;';''' ..... ..... $14.15 13 .00 MOlC'l:S and y~a;li~g'; . .... 14 .25 uto or COW8 .•••• Cnlves . . .... . ..... 11.00 Ii . .., ......... 13 . 25 St~ker 4~k ::::::::: : ::::::: 15 .00 14.75 1041 $12 . 00 11.25 12.50 8.25 11 .00 11.35 12 .00 1042 S15 .00 12 .bO 14 .25 11.00 18.00 14 .85 14.00 1042 S13 .50 1041 $10 .50 . i:i:75 11. 25 8 .00 1l.50 11.00 11 .00 11.00 13 .00 14.26 11 .50 1042 $13 .00 ..,\ .. 13 .50 10.00 12 .06 14 .00 23,813 19.1 01 3.6 a.7 'Po tal vulue of field orops, frnits and Jluts, and trl,ek crops .............. · $605,450 $523, 158 100. 0 100. 0 ·Proliminory. SOUROE: United States Department of Agriculture. CASH FARM INCOME FROM THE SHE OF PRrNCIPAL FARM PRODUCTS (Thousands of dollars) ~-Oetober, 1042 'fotal reoeipts,---~ ~ Receipts from: ~ October October Jan. 1 to Oct. 31 Crops Livestook' 1042 1941 1942 1941 Arizona... ....... 2,748 5,525 8,273 8,821 72,913 58,938 Louisiana ................ 25,129 3,800 28,938 19,313 126,290 86,892 New Mexico .... . ...... ,. 7,204 10,437 23,731 14,783 01,720 44, 114 Oklahoma. . . . . . .... . . . . . 28,080 21,704 50,300 35,857 283,800 196,430 'fexas . . .......... . . . . .. . 89,171 54,863 144,024 92,984 734,312 561,094 Total. .......... 163,028 102,328 266,350 171,768 1.270,050 'Includes r6"eipt. frOID the sule of live.to1k and live8toek produot.. SOURCE: United States Department of Aarioullure. 048,068 4 MONTHLY BUSINESS REVIEW of farm machinery may also become a limiting factor on attainment of crop goals. The War Production Board has announced that the farm machinery industry would be included in the program of industrial concentration, with production of new farm machinery during 1943 reduced to a level substantially below that in 1940, although repair parts are to be produced at the rate of 167 per cent of 1940 output. In November, the Department of Agriculture announced that farm machinery and equipment would be rationed, but Texas quotas are reported to be adequate to meet essential needs. Consideration will be given to the supply of labor, the type of crops and the availability of used machinery and equipment when the county ration quotas are established. Dry weather in December retarded the development of growing truck crops and delayed the planting of spring commercial vegetable crops, but rains of several days' duration in the first half of January brought about a considerable improvement in prospects. Frosts in December did material damage to the tender crops remaining for harvest in the Lower Valley. The damage done to truck crops by the sudden cold wave which occurred after the middle of January has not yet been fully appraised. Approximately 3,491,000 acres of winter wheat were seeded in Texas in the fall of 1942, as compared with 3,423,000 acres in 1941 and the 1930-1939 average of 4,745,000 acres, and the December 1 condition of the crop indicated a production appreciably larger than in 1942. Harvesting of unpicked cotton in the western portion of the district was delayed by unfavorable weather in December and early January, and the grade of cotton remaining in the fields was lowered. Livestock ranges are in generally good condition throughout the district, except in the dry areas in South Texas and in southeastern Arizona. Winter wheat has provided good grazing in North Texas, Oklahoma and eastern New Mexico, and hay and grain are plentiful in most sections of the district. Despite some shrinkage in December, livestock are in generally good flesh. Marketings of livestock continued heavy during November and were substantially above those in that month of 1941. The spring and fall Texas pig crops for 1942 totaled 3,315,000 head, which was 44 per cent above the 1941 pig crop and 58 per cent above the 1931-1940 average. On the basis of stated intention, it is estimated that the 1943 spring crop will exceed the record 1942 spring crop by abollt 30 per cent. FINANCE A survey of banking statistics in the Eleventh Federal Reserve District during 1942 reveals the following pronounced tendencies. Reserve balances of member banks rose to successive new peaks during the year and although required reserves also expanded, excess reserves increased at a faster rate. The deposits of member banks continued to expand at an accelerated rate, a tendency which has been in evidence since the middle of 1933. Loans, which had risen to an all time peak at the end of 1941, fell off sharply during the first nine months of 1942 and increased seasonally during the last quarter. Although the increase in investments during 1941 was up to that time the largest for any twelve-month period of record, it was moderate in comparison with the increase during 1942. The volume of Federal Reserve notes of this bank in actual circulation almost doubled during 1942 and at the end of the year was more than three times the average circulation in the last half of 1939. While these tendencies prevailed generally throughout the year, they gained greatly in momentum during the last six months of 1942. After remaining generally stable during the first five months of the year, the reserve balances of member banks rose sharply in each succeeding month, reaching a new high of $500,000,000 early in January, 1943, as compared with approximately $300,000,000 at the end of 1941. It is significant that 90 per cent of the increase during 1942 occurred during the last six months. Due mainly to an expansion in customer deposits at member banks, required reserves rose about 50 per cent during 1942. CONDITION OF THE FEDERAL RESERVE BANK (Thousands of dollars) .Jnn. 15, Jon. 15, 1043 1042 Total cash reserves............................... !559,534 $415,238 Discounts for member banks... . . . . . . . . . . . . . . . .. . . . None 87 Industrial advances.. .. .... .... .. .... ............. 20 247 United Stot es Government seouri ties .. ... . . ........ . 210,352 87,845 All other investments............................. 00 NOllo Totol earning assets... .. .......... . .............. 210,471 88, 170 Member bank rescrve deposits.............. . . ..... 407,507 316,891 Fedoral Reservo notes in actual circulation.... ...... 244,800 138,213 Dec. 16, 1942 $515,135 38 131 230,964 145 231,278 485,74.6 241,700 CONDITION STATISTICS OF MEMBER BANKS IN LEADING CITIES (Thousands of dollars) ,Jan. 14, Dec. 10, Jan. 13, 1943 1042 1942 Total loons ond investments. . . . . . . . . . . . . . . . . . . . . . . $990,607 $078,089 S944,033 Totnlloans ....... . ......... . .. . .. . '" . .. . . .. . ... 290,723 362,400 300,275 Commerciol, industrial and agrioulturalloans...... 217,331 253,920 224,037 Open markot paper.. .. .. .. .. .. .. .. .. .. .. .. .. .. . 728 1.754 401 Loans to brokers and dealers ill securities.... . . . . . . 1,618 6,804 2,985 Other loons for purohasing or carrying seourities.... 14,122 12,989 10,980 Real estate loans.... . .......................... 10,450 21,097 20,187 Loans to banks...... .... ...... .... .......... ... 114 100 134 All other loans. .. .. . .. .. .. . .. . .. . .. . .. .. .. .. .. . 40,360 64,644 40,651 Total investments....... . .. . .. . ... .... .. .... ..... 600,884 315,689 637,758 United Stotes Treasury bills. . . . . . . . . . . . . . . . . . . . . 73,428 3~J181 67,465 United States Treasury Certificates of Indebtedness. 126,022 Nono 81,375 United States Treasury notes........ .. .......... 110,404 42,055 100,231 United States Government bonds...... . ..... ..... 287,200 138,806 284,120 Obligations guaranteed by United Stoles Gov't..... 35,100 39,401 30,840 Other seeurities. . ..... .. . ... . .. . . . . .. . . .. .. .... 58,631 61,556 58,718 Reserves with Federal Resorve Bank............... 315,130 104,547 303,380 Balances with domestie banks· .. .. . ... .. ... . .... • . . 305,784 303,630 312,748 865,785 624,012 850,329 Demand deposils-adjustedt. . . . . . . . . . . . . .•. . . . .. . Time d'!Poslts ...................... ~. .. ..... . . •. 138,080 131,204 131,210 United Btntes Government deposits... . ... ...... .... 122,848 37,407 03,616 Interbank deposits' .. , ................. ......... 48~J307n60 33~IOoOn40 434.802 Borrowings frem Federal Reserve Bank. . . . . . . . . . . . . N N None 'Beginning July 8. 1042, reeipreeal interbank demand balances reported on not basis. tIneludes all demand deposita ether than interbank nnd United Stotes Government, leS9 cash items reported as on hand or in process of collection. DEBITS TO INDIVIDUAL ACCOUNTS (Thousands of dollars) ~Petg. change fromTotal year Percentage Dec., Dec., Nov., - - - - - - - - e h ange from 1042 1941 1942 1042 1941 1041 Abilene ........... $ 18,406 + 12 + 5 170,171 163,104 +10 Amarillot.. .. ..... 44,740...... - I . 682',006 Austin............ 01,805 +103 +36 458,654 Beaument......... 54,565 + 37 +27 +24 Corpus Christit. . . . 43,005. . . . . . + 10 .. 6t),645 .. 6'1~078 Corsicana. . . . . . . . . 7,908 + 37 +42 4,822,301 4,070,370 Dallas. . . . . . . . . . . . 508,007 + 8 +22 +18 586,305 522,069 EI Paso........... 63,310 + 18 + 8 +12 1,617,733 1,274,074 Fort Worth........ 188,295 + 17 +22 +27 427,085 370,223 Galveston. . . . . . . . . 42,854 8 +23 +15 3,756,237 4,544,850 Houston.. .. .. .. .. . 610,600 + 20 +30 +21 Laredot.. . .. . ..... 10,447 +12 Lubbookt......... 24,776 - 4 18,544.... .. + 0 Monroe, :La t...... Port Arthur. . . .. .. 10,083 + 27 +10 +30 Roswell, N. M. . . . . 7,583 + 25 - 7 +28 San Angelot .... ... 14,043 + 6 i,308',822 i:IO'7~28ti San Antonio. . . . . . . 130,653 + 20 +25 +18 754,331 660,961 Shroveport, La .... 66,906 - JO + 7 +14 245,009 145,153 Texarkana·.... .... 17,264 - 32 +17 +69 244,598 170,805 Tucson, Ariz .. .... 23,033 + 33 + 3 +36 163,157 161,606 'lYler............. 16,286 2 +14 +1 286,960 200,531 Waco........ .... . 29,275 + 20 +14 +37 251,690 250,773 Wiohita Falls. . .. . . 27,404 - 33 +20 -3 +5i +io --- Total- 18 cities .... $1,841,327 + 16 +23 $10,898,001 $13,056,472 +21 Tetal-24 cities. . .. 1,907,701 +21 'Includes the figurcs of two banks in Texarkana, Arkansas! located in the Eighth Distriot. tNew reporting centor; data prior to May, 1942, not avai ablo. GROSS DEMAND AND TIME DEPOSITS OF MEMBER BANKS (Averago of daily figures-Thousands of dollars) Country banks Combined total neservo city banks Gross Gross Gross Time Time demnnd Timo demand demand 1940 ....... . . $1,474,217 $237,308 $ 841,003 $131,622 $ 632,314 $105,686 774,440 104,871 236,810 1,028,881 131,048 .941. ......... 1,803,330 226,010 1,137,687 127,231 847,441 09,685 1942 .......... 1,985,128 227,472 1,160,232 127,368 888,051 100,104 1042 .......... 2,055,183 100,124 225,701 1,269,835 125,667 073,840 1042 .. ........ 2,243,675 228,284 1,363,582 127,231 1,050,881 101,053 1042 ..... ..... 2,420.463 227,067 1,400,302 128,431 1,123.528 00,536 1042 ........ . . 2,532,830 SAVINGS DEPOSITS Deeember 31, 1042 Pereel\taso change in snvings oposits frem Number ef Numbor of Amount of Nov. 30, savings Dee.3l, savin~B regortin g 1041 1042 depOSIts depositors anks 10,712 $ 4,513,008 + 4.0 3 Beaument ... . ........... +1.4 27,643,816 + 4.8 00,720 2.8 DaUas .. . ... .... ....... . 8 7,877,255 + 5.5 2 18,670 + 4.1 EI Paso . . ............... 13,050,551 32,828 Fort Worth ... ........... 3 + 2.6 + .1 11,010,440 - 1.6 18,389 4 Galveston ............. . . + .0 73,703 33,405,433 10 HOllston ................. + 2.3 + 1.6 553,001 - 2.1 1,150 + 7. 0 3 Lubbock . . .. .... ....... . .03 2,062,810 - 1.7 2 5,032 Port Arthur .. .... ....... 23,684 10,447.168 + 0.8 5 + 3.8 San An tonio ..... ........ 11,706,013 - 2.0 .8 24,838 Shreveport, La ... .. • . .... 3 4,463,241 7,344 3 + 4. 1 + 2.7 Waco .......... . . .... . . . 3,497,585 + .6 6,000 Wichita Falls .... .. .••.. . 3 +1.1 27,693,036 49,645 .8 50 + 1.3 All other ........... ... .. Deeomber, December, Augnst, September, October, November, December, + - + Total. .. ........ 108 --363,.20 - 1167,021,277 + 2. 2 +1.0 MONTHLY BUSINESS REVIEW A verage excess reserves rose to a new peak of $153,000,000 during December, and balances with correspondents were also at a record level. Gross deposits at weekly reporting member banks in the Eleventh District increased $405,000,000 during 1942, but about one-fourth of the increase was in United States Government deposits arising out of the December Treasury financing. Adjust ed demand deposits, which had risen. to $848,000,000 on Novcmber 25, declined $27,000,000 during December in sympathy with the trend in other sections of the country, but the total on Decem'ber 30 was $220,000,000 higher than a year earlier. Thus, adjusted demand deposits of weekly reporting member banks in this district increased about 35 per cent during 1942, compared with an average increase of 20 per cent at all wcekly reporting member banks in 101 leading cities in the United States. MEMBER BANK RESERVES n.r:VCNTH '[O[AAL RC5[AVE OfSTAK;T "'" I----+--.I---~--+-_!--+--I--_t_-_j 000 ~I--~---+---+--+--!--+--;I----r-_j ~ ~ 1----+---·I---!--4-----I----+---r-~I.i----j·OO ~~---+---+----+---4---4-----r---t~~~r---j~ - - - - - - this dis~rict,~loans at '- ~~~~,u=.ul 0 ~ weekly reporting member banks, In 33 which had risen to a twelve year peak at the end of 1941, declined almost continuously to September 16 when the to.tal amounted to $297,650,000. Although there was a seasonal Illcrease in loans during the last quarter of the year, total loans of $312,050,000 on December 30 were $61,783,000 smaller than a year earlier. Corresponding with the tre~d at al! reporting banks in the United States, most of thCl ?echne durlllg 1942 occurred in commercial, industrial and agncu!tural loans, and in '''all other" loans which include personal and Illstalment loans. Loans of weekl~ reporting banks in this. district normal~y constitute a larger proportion of total earmng assets than III many other sections of the country. Thus! at. th~ end of 1941 total loans of weekly reporting banks in thIS dIstrIct ~ere somewhat larger in volume than total investments. Dunng 1942, . however, this relationship was reversed, an~ at the end of the year total investments were more than tWIce as large as total loans. On December 30, 1942, total investments amounted. to $676,000,000, representing an increase of $363.'000,000 durlllg the year as compared with thc previous record Ill~rease of $51,000,000 in 1941. As in other sections of the Umted S~at~s, ~he increase in investmcnts of weekly reporting banks in thIS ~Istnct during 1942 was accounted for entirely by increased holdIngs of direct obligations of the United States .Go~ernment, whcreas holdings of Government guaranteed obltgatlons and non-g?,vcrnmental securities declined. During 1942 wee~ly repo~tIng member banks in this district increased their holdIngs of dIrect Government obligations by $366,000,000 divi~ed among the various types of Government securities approxImately as follows: Treasury bills and Treasury Certificates of Indebtedness, 42 per cent; Treasury notes, 18 per cent; and Treasury ?onds, 40 per cent; whereas at weekly reporting mem~er bank~ III 101 !eading cities throughout the United' States the Increase III holdIIlgs was divided 57 per cent, 12 per cent, and 31 per cent, respectively. . Final figures on the December Victory Fund dnve show that 5 the Treasury raised a total of $12,906,000,000, which was about 43 per cent above the goal of $9,000,000,000 set by the Secretary of the Treasury. The outstanding success of the drive is indicated not only by the huge amount raised, but also by the fact that $7,834,000,000 was received from sources other than commercial banks. In this district subscriptions aggregated $404,000,000, of which $342,652,000 was allotted to investors. Allotments to nonbank investors amounted to $140,822,000, while those to banks totaled $201,830,000. INDUSTRY The war production program gave impetus to the industrial development of the Eleventh District in 1942. One steel plant was brought into operation and construction of another was begun. Shipbuilding facilities were expanded, construction of ships was greatly increased, and the expansion of several aircraft manufacturing establishments, as well as the entrance into production of ordnance plants, brought about a substantial increase in the production of war material in this district. Numerous manufacturing enterprises, including both large and small plants, converted successfully to war production during the year and are now prime or sub-contractors producing items used in ordnance, aircraft construction and shipbuilding. An important industrial development of the year was the further expansion of the chemical industry in this district. War demands for large quantities of chemicals have stimulated rapid progress in the utilization of petroleum and natural gases as sources of chemical compounds. Chemical plants now operating in this district are synthesizing a diversified list of products from petroleum, including components of synthetic rubber, super fuels, anti-freeze compounds, ammonia, acetylene, toluol and synthetic alcohol, all of which are highly important in the prosecution of the war. Several ammonia plants were constructed in this district during the year, and construction was begun or projected on the eighteen plants which will manufacture the basic materials of synthetic rubber in Texas. The aviation gaso~ line producing capacity of the district was also considerably expanded during 1942, and other chemical plants in the district which are producing essential war materials were enlarged. Employment increased in Texas during 1942 both in industry and in trade, and in November, 1942, the number of persons engaged in nonagricultural pursuits was 14 per cent greater than in November, 1941. In November there were 312,000 workers in Texas manufacturing enterprises and' 1,077,000 persons in other nonagricultural establishments, representing increases of 74,000 and 96,000, respectively, as compared with N ovem ber, 1941. Thus, manufacturing employ men t increased approximately 31 per cent and all other nonagricultural employment increased 10 per cent during the twelve month period cnded November, 1942. During the same period, employment jn manufacturing establishments in the United States increased about 14 per cent, and employment in all other nonagricultural establishments increased fractionally. NONAGRICULTURAL EMPLOYMENT IN TEXAS 2000 I-------I·---- + -----I------I-------j---- --I ~ __ 11)9. ,... " 00 DJ'OO = ,,,, ... , 6 MONTHLY BUSINESS REVIEW The influx of workers into the war production centers of this district depleted the supply of residential vacancies in those cities during 1942. Recent surveys of occupancy indicate that less than 2 per cent of the dwelling units are vacant in Corpus Christi, Houston, Dallas, Fort Worth, Beaumont, Galveston and Orange. In November t.he vacancy rate in Houston was estimated at .9 per cent and in Orange the rate was .8 per cent in August. Vacancy rates of 1.0 per cent for Corpus Christi in November, 1.1 per cent for Fort Worth in August, and 1.9 per cent for Dallas in September were reported. In contrast, 5 per cent or more of the dwelling units in Houston, Dallas and Fort Worth were vacant in April, 1940, and 2.3 per cent or more were vacant in those cities in December, 1941. The minimum tolerable level of vacancies is estimated at .5 per cent to .8 per cent of dwelling units. The value of construction contracts awarded in the Eleventh District during 1942 was more than twice as great as the preceding annual record esta blished in 1941. In the first quarter of 1942, awards totaled somewhat less than in either the third or fourth quarters of 1941, but in May, 1942, the value of awards increased substantially and thereafter established a new high level for each particular month until in October the all-time peak of $128,901,000 was attained, an amount in excess of the total value of awards in each of the years from 1932 through 1936, and almost as great as the 1928-1937 annual average. Although the value of awards declined considerably in November, it was nevertheless greater than in the same month of 1941, and in December the value of awards increased substantially to set an aU-time record for the month. Expanding defense contracts for all types of construction were the principal factors in the expansion of construction activity in this district during 1942. An intensification of defense housing construction offset the decline in private residential construction which followed the War Production Board's limitation on private building issued in April, 1942. In December the value of residential awards was almost 75 per cent greater than in any preceding month of record, reflecting the large amount of defense housing which was undertaken in the district. From May through September, awards for public works and utilities were particularly heavy, and from July through November award5 for industrial manufacturing buildings were greater than in any comparable period of record. The accompanying ratio chart of construction in the Eleventh District emphasizes the rapid rate of increase in the value of total construction awards during 1942. The absolute magnitude of the value of residential and all other construction awards is illustrated by the table of monthly awards presented elsewhere in this issue. .CONSTRUCTION "'200 LL CONTRACTS Of' OOI.l.AA.S NS IoIlU 10Nl .".4. 100 80 40 I '0 Et~/-\ - IR ~~~ J V l k \~~ r-:A~ ~t TOTAL 1'--1 . - r-\- sI~ (vi \ M,,'rJ I,) 'rr/- or DOl. LA., 200 '00 eo \'[ 1- .eo 20 AWARDED ELEVENTH FEDERAL AU£RV£ DISTRJCT eo 40 same months of all preceding years of record, and exceeded 1,000,000 'barrels in each of the last eight months of the year, reaching an all-time peak of 1,146,000 barrels in July and declining only slightly thereafter. In the period May to August, shipments exceeded production in spite of the substantial increases in output, and by August stocks had fallen to the lowest level since August, 1928. Although stocks were partially replenished during the following months, the total of 478,000 barrels at the end of November was still only a'bout 50 pel' cent of November shipments. During 1942, production at pine mills was maintained at levels somewhat below those of shipments. As a result, stocks at the mills were further reduced, and at the end of 1942 were approximately 40 per cent smaller than a year earlier. The petroleum industry found it necessary to effect adjustments of considerable magnitude in its operations during 1942. Daily average producti~n in the Eleventh District, which reached an all-time peak in February, declined sharply in the following two months because of the inability to deliver petroleum to the important Eastern markets through the established VALUE OF CONSTRUCTION CONTRACTS AWARDED (Thousand. of dollnrs) Decembor December !'Iovombcr Jan . 1 to 1042. 1041 1042 1042 Elovonth District- total. .. 97,458 22,077 53,728r 808,542 Residential. . . . . .. . . .. . 20,682 0,301 7,772 155,R22 All otbor.. .. .... .... .. n7,776 16,016 45,956 742,720 Unitr.d States'- total.. . .. 708,716 431,626 054,184 8,255,061 Residontial.. .. .. .. .. .. IbO,652 104,276 150,654 1,817,733 All other .... . .. , . . .. . . 540,064 327,350 407,530 6,437,328 '37 States oast of Rocky Mountains. r-Rovised. SOURCg: F. W. Dodgo Corporation. VALUE OF CONSTRUCTION CONTRACTS AWARDED- ELEVENTH DISTRICT (Thousands of dollars) 'fotal aw~rds Residential awards All other awards Month 1042 .Tanuary . . . . ....... . .. . .. $ 23,209 February ..... .... .. .. . .. March ... .. . ..... .. .. ... April .. .... .. . .. .. ... ... . May .. . .. ... .. , ... .. . ... June ... ......... ... ..... July . . . ....... ... .. .. .. . August ..... ........ ..... Rcptembcr .. . .. . . . . . ... . . October . .. .. ... . . . ...... November ...... . .. .. .. .. December ... . . . . . .. . . .. . W 20 '0 8 ',", II ,.,. ,.,. ,.,. ,, ,, ,>3> "" ''''' '''''' The large volume of plant construction in 1942 stimulated activity at Texas Portland cement mills. Production of cement was consistently greater during each month in 1942 than in the 1041 1042 S 20,768 $ 10,105 23,581 18,504 21,774 10,780 45,234 4,450 20,215 10,213 21,831 15,403 23,138 10,441 93,500 11,008 40,261 10,431 70,101 16,004 28,464 7,772 22,077 20,082 1041 $ 8,448 7,505 7,916 12,240 0,522 0,450 0,312 10,476 10,301 18,021 7,074 6,361 1042 $ 13,104 24,417 36,154 14,228 83,930 71,474 87,000 03,812 91,123 112,837 45,956 07,776 1041 $ 12,320 10,010 13,858 32,P04 10,1103 12.375 13,820 77,123 35,870 52,080 20,400 16,616 year ..... . ... ... .. $808,542 $440,943 S 155,822 $123,682 S 742,720 $323,261 SOURGE: F. W. Dodge Corporation. BUILDING FERMITS Percentago ~hango Percentage December, 1042 valuation from Jan. 1 toDoc. 31, 1042 chan~o Abilene . . ... .. ... Amarillo .... . ... . Aust·in ........... Beaumont . ....... Coreus Christi. ... Dalas ....... .... EI Paso .......... Fort Worth .. . ... . Galveston . . .. .... Houston ..... . .. . . Lubbock . ... .... . Port Arthur . ... .. San Antonio ... . . . Shreveport, La •. . . Waco . . .... .... .. Wichita Falls ..... No. V.luation Dec.,I041 Nov.,1942 15 3,380 - 03 + 03 24 43,705 - 73 81 75 33,748 - 00 + 130 laO 30,035 - 71 + 14 75 1,048,092 +543 +1054 375 277,172 - 82 20 62,355 48 - 07 49 231 775,545 - 05 + 424 48 II ,355 - 87 44 74 61,800 - 04 69 56 7,802 - 05 31 42 11,620 - 02 + 32 033 410,603 + 2 + 21 22 14,010 - 04 + 47 35 66,300 53 + 3 7 2,530 - 90 00 - - ---- -- - 86 + 58 valuatIOn No. Valuation from 1041 301 $ 1,206,168 - 3 473 055,757 - 65 1,056 1,587,223 - 71 1,800 2,400,220 +11 1,496 10,430,287 - 13 7,493 0,561,908 - 02 670 2,608,645 -16 3,000 11,018,898 -47 1,148 2,380,010 - 56 2,506 11,201,010 -41 1,122 2,008,870 -40 812 301,035 - 69 0,583 4,872,476 - 37 1,030 2,020,927 - 42 068 1,350,877 - 66 344 641,007 -85 33,760 $01,868,124 -45 1'0R1'LAND CEMENT STATISTICS-TEXAS MILl.S (Thollsand. of barrols) Shipments Stocks (end of month) Production January . ..... . .......... February .. ... .. ... ..... . March ............. ..... ~;~l.:.'.': : :: : ::::: :: ::: : . . 42,981 46,034 18,687 04,143 8n,877 98,350 105,720 101,554 128,901 1i3,728 07,458 Total. . . ... 1,800 $2,871,701 - -- Dec. 31 1041 446,943 123,682 323,201 0,007,474 1,953,801 4,053,673 June ... ... ... .. ........ . July . . . . ....... . ... . .. .. Aug"st .. . . ... . .. . .. . . . .. September .. . ....... .. ... Octobor . . ... . .... .. .. ... November .. . . .. . ........ December ... . .. . . . . .... . Total .. : ........ 1042 850 878 976 949 1,015 1,045 1,146 1,103 1,036 1,070 1,021 1041 654 637 742 798 832 806 837 970 930 859 779 829 -0,679 1042 847 811 073 021 1,152 1,321 1,324 1,130 900 1,007 065 IOU 703 028 707 770 805 701 014 075 885 782 850 44 0,843 1042 742 809 811 830 702 427 250 216 353 422 478 1041 764 773 808 827 764 770 702 704 740 825 754 739 MONTHLY BUSINESS REVIEW 7 channels, In April daily average production was 31 per cent District declined steadily throughout 1942 and during the last under the February peak of 1,767,175 barrels, and was smaller quarter was about 50 per cent below the level of the first quarthan in any preceding month since August, 1939, Rapid prog- ter of the year and only about one-third as large as that in the ress was made in expanding railroad tank car deliveries to the ~ast quarter of 194,1. I?uring 1942', 5,968 wells were completed East Coast, Receipts of petroleum and petroleum products by In the Eleventh DIStClct as compared with 11,534 wells comrailroad tank cars on the East Coast, which averaged 323,775 pleted in 194 I, a decline of approximately 48 per cent, Approxibarrels daily during the week ended February 28, 1942, rose to mately 62 p<;r cent of the wells completed in this district dUl'ing an average of 856,710 'barrels daily in the week ended September 1942 were 011 wells and 31 per cent were dry holes, as compared 19, During the last three months of the year, however, railroad with 72 per cent oil wells and 23 per cent dry holes in 1941. tank car deliveries to the East Coast were limited by mechanical Only 28 per cent of the wells completed in the United States breakdowns of tank cars and by unfavorable weather conditions, during. 1942 were drilled in this district, as compared with and throughout the four weeks ended December 26, tank car apprmClm3 tely 36 per cent in 1941. Drilling activity in this disdeliveries to the Eastern Seaboard averaged only 737,000 bar- trict in December, 1942, as measured! by completions, was 65 rels daily, Some progress was also made during the summer and per cent below that in December, 1941. Well completions outfall in reversing pipe lines to provide increased flow of petroleum side this district during December were 29 per cent fewer than from the district into the Middle West and East, As improve- in the corresponding month of 1941. ment in the petroleum transportation situation occurred, petroDomestic cotton mill facilities were employed intensively on leum production in this district was expanded, In August, daily Government orders during December and the first half of Januaverage production rose to 1,571,244 barrels and was maintained ary, and a steady demand absorbed. cotton offerings, According approximately at that level in the remaining four months of to the Bureau of the Census, Uruted States cotton mill conthe year, sumption totaled 935,511 bales in December as compared with t In spite of the substantial curtailment of petroleum produc- 913,038 bales in November, and 888,379 bales in December tion after February, stocks of crude petroleum in this district 1941. Consumption totaled 4,712,000 bales during the fiv; increased throughout the period and on January 2, 1943, w~rc months, August through December, as compared with 4,443 _ ' 23 per cent greater than on January 3, 1942, Other producing 000 bales during the same period of 1941. The 946,842 tons of cottonseed received at Texas mills durareas in the United States which were closer to the marketing areas have been unable to expand production sufficiently to meet ing the August 1 to December 3 I, 1942 season was 12 per cent demands, and stocks have declined materially, As a result, the above receipts during the same period of 1941 and greater than petroleum industry now faces a situation in which crude petro- during any comparable period since 1937, Operations at Texas leum inventories outside the Eleventh District are close to mini- and United States cottonseed oil mills during the period were maintained about 20 per cent above the level of 1941. Mill mum working levels, A substantial increase in the demand for crude petroleum i~ stocks of crude cottonseed oil, cake, meal and hulls were subexpected to occur during 1943, and since it appears that the stantially smaller on December 31, 1942, than a year previous areas in the United States which are in the best position to sup- and cottonseed on hand was slightly smaller, but stocks of port an expansion of production without seriously reducing the linters were considerably larger, ultimate productivity of the oil reservoir are the Gulf Coastal district and the West Texas and New Mexico Permian basin, it CRUDE OIL PRODUCTION-(Barrols) is likely that production will be increased in this district as December, 1942 Inoreaso or dooreaso in daily avorage produotion from facilities for transporting the petroleum are provided, The War Total Dailyavg. produotion produutioll Dec., 1041 Nov., 1942 Emergency Pipe Line, which will come into operation in Febru7,150,650 North Toxa... .. .. .. .... .... . 230,666 - 1,887 +3,243 ary, will at first require 120,000 to 150,000 barrels daily and is West Toxas .. ... . ... , .. . . . . . . 6,400,550 208,508 - 03,454 - 3,304 East Texas ... . .......... . . . . 14,205,700 458,248 14,536 +7,775 expected to carry 300,000 barrels daily by mid-spring, practi- South Toxus .. . .. .. ....... .. . 5,418,450 174,780 - 50,306 +1,452 313,016 + 0,827 cally all of which will be gathered in this district, However, the Toxas Coastal ..... ... .. ..... . 0,703,500 + 186 Total Texas . . .. .. . 42,044,850 1,385,317 -150,446 demand for petroleum to supply the line will be partially offset +0,262 Louisiana.. .... .. .. .. .. 2,854,850 02,002 + 10,103 - 3,820 by a reduction in shipments of petroleum from the district via North New Mexico, " . . . . . . . . . . . . . . 2,023,250 04,209 - 24,020 - 3,461 tank car, for when the line is completed, tank cars which have Total Distriot .. . .. . 48,722,950 1,571,708 - 164,368 +1,081 been operating between the Gulf Coast and the Eastern SeaSOURCE: Estimated from Amerioan Potroloum Instituto weekly roports. board will be transferred to the Illinois-New York nm, If they are returned to the former run when the authorized extension DOMESTIC CONSUMPTION AND STOCKS OF COTTON-(Bal08) December December November Au~ust 1 to Docomber 31 of the pipe line from Illinois to New York is completed, a ~ub 1042 1041 1042 Th,. season Last senson nt: stantial increase of production in this district may be reqUired, COllsumption 21,350 10,830 21,048 Texas mills ...... . .... . 106,178 06,608 085,511 888,370 013,038 United Statcs mills ... . . Adjustment in refinery operations was necessitated during 4,7J2,277 4,443,1 85 U.S. stooks-end of month: 1942 by enlarged demands for fuel oils and curtailed use of ga~o 2,305,380 2,440,684 In eOllsuming ostnbm'ts. 2,567,J86 Publio stg. !< eompresse•. 13,576,030 1~,700, 883 13,637,120 line, During the four weeks ended November 21, 1942, gasolme accoun ted for 38,7 per cent cent of total United States refi~ery STATfSTICS ON COTTONSEED AND COTTONSEElD PRODUCTS yields, as compared with 44,2 per cent in 1941. Kerosene like~- - -- Toxas ---~ Unitod States~ wise accounted for a smaller portion of refinery output but the August 1 to December 31 August 1 to December 3J refinery output of distillate fuels and residual fuels increased Cottonsced recoived at mills This seasoll IAlst seasoll This season Last season 046,842 844,602 4,040,431 3,446,607 in relative importance, Further restriction of the proportion of (tOilS) .... .. ...... .. .. . ... . 693,273 581,58J 2,726,684 2,286,477 Cottollseod orushed (tons) . . . . . gasoline output is anticipated during the first q~arter of 194,3, Cottonseed on hond Deo. 31: 286,524 200,305 1,401,218 1,200,050 (tens) .... .. . .. . .... . .. . .. , accompanied by relative increases in the productIOn of fuel Oils Produotion of produots: and kerosene, Such changes involve a shift of refinery oU,tput 200,747 168,626 840,854 Crucle oil (t.houSllnd Ibs.) . . . . 704,522 308,937 258,642 1,205,051 Cake and meal (tons) . .... . . 000,547 from products of relatively high value to products of relatively 170,545 150,604 650,007 572,810 Hulls (tons) ... . ...... .. .. . 158,427 200,903 817, 670 ~63,.1 07 Linters (running balos) ... . . . low value, on hond Deo. 31: Limitations on the use of scarce materials in drilling which Stookp 18,839 61,740 Crude oil (thousand Ibs.) . .. . 16,252 57,939 132,330 92,672 Coke and moal (tons) . . . . . . . 41,083 380,503 were imposed by the War Production Board d~rin~ 19~2 ~e 1J8,430 49,456 H"lIs (toos) .. .. .. .. . .. .. .. . 22,622 248,481 45,772 222,036 Lint01'l! (r.lOning boles)...... 64,79J 142,112 suited in a substantial reduction in well completions m thiS disSOURCE: United Stotes Buroau uf Cenana. trict and in the United States, Drilling activity in the Eleventh MONTHLY BUSINESS REVIEW FEBRUARY 1,1943 NATIONAL SUMMARY OF BUSINESS CONDITIONS (Complied by the Board of Governors of the Federal Reserve System) ... - INDUSTRIAL PRODUOTION 200 / 180 / 160 160 I 1ft J 1<10 140 J 120 100 180 ./ IV \ / v i'-o../ 80 1936 120 I IV \ / 1937 1938 " 1939 100 80 1940 1941 1942 Federal Reserve monchly index of physical volume of production, adjusted for seasonal variation, 1935-39 average 100. Latest figures sbown are for December, 1942. = WHOLESALE PRICES ,.- .ur ;'o·~';!·--"---r--"---r--'---r--.!!; 120 110 100 'O ~--~~I--+---+--+---+~~~+---+ .0 80 10~--+--+~~-~--r~.A---J~-4---+ 10 .0~--+--+---+~~+---+--4---+ 00 .0 L-_~ 1936 __ ~_-i 1937 1938 _ _~_~_ _J-_~ 1939 1940 1941 00 1942 Bureau of Labor Scatistics' weekly indexes, 1926 aver100. Latest figures shown are for week ending age January 16, 1943. = MEMBER BANK RESERVES AND RELATED ITEMS Z4 z 20 " " '~$"""'"""II;UCJlVt1\lN05 IOU I J nt_ / ------i------T-r1 ~ fltWUtI't CUAIIIIIC'I" ii t- ..' · _ .... Q 1140 lUI 1942. 19 41 1942 Wednesday lif.ures. Required and excess reserves, buc noc the coca. are partl~ estimated. Lacest figures shown are for January 13, 1943. MEMBER BANK RESERVES Industrial activity continued at a high level in December and the first half of January and distribution of commodities to consumers was sustained. Prices of farm products and retail foods advanced further, while prices of most other commodities showed little change. PRODUCTION Industrial production in December showed less than the usual decline from November and the Board's seasonally adjusted index rose twO points further to 196 per cent of the 1935-39 average. Munitions output continued to increase, raising total durable goods production to a level 33 per cent higher than in December a year ago, while for the same period production of nondurable goods was only 4 per cent larger and mineral output was somewhat lower. Steel production in December and the first half of January averaged 97 per cent of capacity, down slightly from the October and November levels. Total steel production for the year showed a 4 per cent increase over 1941 while the output of steel plate, important in shipbuilding and tank production, rose 90 per cent over the previous year. This increase over a year ago was largely obtained by conversion of existing facilities. Output of lumber, and stone, clay and glass production in December showed larger declines than are usual at this time of year. Output of nondurable goods showed little change from November to December. Textile production continued at the high level which has prevailed for the past year and a half. Meat packing increased sharply, reflecting exceptionally large hog slaughter and output of most other manufactured foods was maintained at a high level. Mineral production was lower in December, reflecting a decline in coal output from the peak reached in November. Bituminous coal production in 1942. was the second largest in the history of the industry, averaging 13 per cent greater than 1941. Crude petroleum production in December continued at the level of earlier months and for the enti~e year was slightly lower than 1941, reflecting transportation shortages. In the first half of January production of bituminous coal and petroleum was maintained, but a number of anthracite mines were closed by an industrial dispute. Value of construction contracts awarded in December, according to the F. W. Dodge Corporation, was somewhat higher than in November. Contracts for apartment-type buildings for housing war workers continued to rise and public works increased sharply, while awards for manufacturing buildings declined further. The value of construction was 3.2 billion dollars in the fourth quarter of 1942, according to preliminary estimates of the Department of Commerce. This was about 25 per cent lower than the peak of 4.3 billion reached in the previous quarter, but slightly higher than that of the fourth quarter of 1941. Installations for direct military use and industrial facilities accounted for almost three-quarters of the total, and residential building contributed somewhat less than half of the remainder. For the year as a whole, construction is valued at 13.6 billion dollars--of which almost four -fifths was publicly financed -an increase of one-fifth over 1941. The increase took place entirely in military and industrial projectS, which rose 4.4 biJIion dollars. All other types of construction declined. DISTRIBUTION Distribution of commodities to consumers was maintained at a high level in December and the first half of January, after allowance for the sharp fluctuations that are customary at this time of year. The 1942 Christmas buying season exceeded that of any previous year, value of sales at department stores, for example, being about 15 per cent larger in November and December than in the corresponding period of 1941. The increase over the year period reflected in part price advances but there was also an increase in the volume of goods sold. Freight carloadings declined about the usual seasonal amOunt in December, and the Board's adjusted index remained at 134 per cent of the 1935-39 average. Grain, livestock, and miscellaneous loadings rose somewhat on a seasonally adjusted basis, while coal and other products declined slightly. COMMODITY PRICES Prices of agricultural commodities advanced sharply from the early part of December to the middle of January. Maximum prices designed to restrict further increases were issued for some of these commodities, including corn and mixed feeds. For certain other products, however, like potatoes and truck crops, Federal price supports were increased. Wholesale prices of most other commodities continued to show little change. From mid-November to mid-December retail food prices advanced 1.6 points to about 13 3 per cent of the 1935-39 average. Further increases in these prices arc indicated in Januuy 3S 3 result of advances permitted recently in maximum levels for such items as flour, milk, and poultry. BANK CREDIT Excess reserves of member banks declined sharply in the last week of December, and during the first half of January they averaged about 2.2 billion dollars, as compared with 2.5 billion for most of December. Large payments to the Treasury for new securities, some increase in currency, and other endof-year requirements were responsible for drains on reserves during the last week of December. There were, however, substantial sales of Treasury bills to Federal Reserve Banks under options to repurchase; In the early part of January, reduction in Treasury balances at the Reserve Banks and a return floW 0 currency supplied banks with additional reserves, and some of the bills sold to the Reserve Danks w er repurchased. During this period Reserve Bank holdings of Government securities, which had increase to,6.2 billion dollars by December 31, declined to below 6 billion. f Reflecting largely purchases of the % per cent certificates of indebtedness delivered in the week? December 30, holdings of direct and guaranteed Government obligations at reporting member banks J1l 101 cities increased by 1.8 billion dollars to 28 billion over the four weeks ending January 13. Ne'" York City banks took 640 million of the 1.5 billion dollars of certificates sold to reporting banks. Cojmercial loans in New York City declined by 90 million dollars; outside New York there was htt e change. Loans to brokers and dealers rose sharply in December during the Victory Fund campaign, but declined correspondingly in the following weeks. Other loans continued to decline. UNITED STATES GOVERNMENT SECURITY PRICES Subsequent to the close of the Victory Fund drive in December prices of United States Governtllcnt securities increased. Long-term taxable bonds arc yielding 2.32 per cent on the average, and long-terril partially tax-exempt bonds 2.06 per cent. d Wednesday ligures. Lat"'c figures shown are for January 13, 1943.
@FedFRASER